A secure retirement is one of the pillars of middle class life. For all too many Americans, however, that pillar needs more support. That's why yesterday the President called for strengthening Social Security, increasing benefits so hard-working Americans can enjoy the dignified retirement they have earned while at the same time improving the program's long-term health.
Yesterday's call to action is part of the President's ongoing effort to help more Americans enjoy a secure retirement. Last summer, President Obama called on states to create savings programs for workers who do not have retirement savings arrangements through their employers. And these past few weeks, Maryland and Connecticut responded to that call, passing laws to do just that. The two states join California, Illinois, New Jersey, Oregon, Massachusetts, and Washington, bringing the total to 8 states, nearly double where we were last July.
This is a huge accomplishment: as a result, approximately 1.5 million people in Maryland and Connecticut alone who were previously unable to save for retirement at work will be automatically enrolled in a workplace savings arrangement.
Americans should be able to enjoy a secure retirement after a lifetime of hard work. But too many Americans reach retirement without enough savings to supplement their Social Security benefits. In fact, fewer than one-third of individuals aged 65 to 74 have any savings in a retirement account, and those that do have a median savings balance of just $49,000.
Fortunately, we know how to increase retirement savings. Workers are most likely to save for retirement if they have access to a workplace savings plan and are automatically enrolled in that plan. But right now, approximately 68 million workers do not have the opportunity to save for retirement through their employer. And fewer than 10 percent of all Americans save on their own using an Individual Retirement Account (IRA).
That's why the President launched myRA, a simple, risk-free retirement savings account intended for Americans without access to a workplace plan. And it's why, in every budget since taking office, he has proposed to automatically enroll in an IRA approximately 30 million employees who don't have access to workplace savings plans. Congress has repeatedly failed to act on this auto-IRA proposal at the federal level. But as in so many other areas where Republicans in Congress are blocking progress, these eight states are stepping up and creating their own retirement savings arrangements for private-sector workers. And they are experimenting with different approaches. Massachusetts, for example, has enacted a law to allow certain nonprofit organizations to adopt a plan workers can contribute to that is developed and administered by the state. California, Illinois, and Oregon have adopted auto-IRA laws similar to the President's proposal, while Washington and New Jersey have adopted laws to create special marketplaces that will connect small businesses with state-approved retirement savings options. And we're taking steps at the federal level to support these efforts, issuing soon-to-be-finalized rules clarifying how state-level programs can be set up in a manner that is consistent with federal pension law, providing a legal path forward.
These state savings programs offer American families a simple, consistent method to put away money each month that will grow toward what they need for a comfortable and well-deserved retirement. And they complement our efforts at the federal level to ensure that Americans who save for retirement are able to protect and grow their nest eggs. Until this year, outdated regulations allowed firms to incentivize financial advisers to steer retirement savers into products that have higher fees and lower returns -- costing America's families an estimated $17 billion a year. The Department of Labor's final conflict of interest rule will ensure that America's workers and retirees receive retirement advice in their best interest.
So, that's what we support and what we've been up to: protecting and strengthening Social Security; providing an opportunity for more Americans to save at work; and ensuring families get retirement investment advice in their best interest. We applaud Maryland and Connecticut for stepping up to support their workers' retirement security, and we look forward to more states following their lead.
Cross-posted from The White House Blog.